MBA ECONOMIST PREDICTS COMMERCIAL LOAN RATES

MBA ECONOMIST PREDICTS COMMERCIAL LOAN RATES

At the recent Mortgage Bankers Association meetings in Orlando, Florida Douglas Duncan, chief economist of MBA predicted that the spreads quoted by commercial mortgage lenders on commercial mortgages would remain at about their current level of 190 to 200 basis points through the end of 2008. (190 basis points equals 1.9% and is generally added to the current 10 year treasury bond yield which was 3.57% on April 3, 2008).

He noted that the spreads were about 135 basis points in the early 1990’s but increased to about 185 basis points in the late 1990’s but then fell to 140 to 150 basis points in 2007. At the current level the lowest rate on commercial loans would be in the 5.5 to 5.6% range.